ROAS (Return on Ad Spend)

ROAS: return on ad spend

ROAS (Return On Ad Spend) tells you how much revenue each unit of ad spend brought in. The formula is ROAS = revenue / ad_spend. Say you pulled R$ 20,000 in revenue from R$ 5,000 in ads. That's a ROAS of 4×, meaning R$ 4 came back for every R$ 1 you put in. Just remember ROAS is not the same as ROI, since it leaves out product margin, COGS, and shipping. To find your break-even ROAS, use 1 / gross_margin. On a 25% margin that means you need ROAS ≥ 4× before you even start making money.

Applications

This is the metric that anchors performance marketing on Google Ads, Meta Ads Manager (Facebook/Instagram) and TikTok Ads. Teams lean on it to compare creatives, audiences and campaigns, and to decide where the daily budget goes in e-commerce paid media. Benchmarks aren't fixed: Google Ads tends to land around 2-4×, Meta 2-3×, and LinkedIn 1-2× (B2B runs a lower ROAS but usually a higher LTV).

FAQ

What's a good ROAS? It comes down to your margin. At 50% margin, break-even sits at 2× and everything past that is profit. At 20% margin, you're looking at 5× just to break even. Work out the break-even ROAS first, then set a target above it.

ROAS vs. ROI? ROAS is built on gross revenue while ROI works from net profit. A 4× ROAS can look fantastic and still leave you with negative ROI once COGS, fees and operations come out.

Should I include organic revenue? No. ROAS is meant to capture only the revenue attributed to ads. If you want a picture of total efficiency that folds in organic, switch to a blended metric like MER (Marketing Efficiency Ratio).